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Wednesday 25 January 2012

Tuesday 17 January 2012

Now that Scottish Independence is firmly on the agenda, and the sovereign debt crisis threatens to engulf the Eurozone, it is time to look at the implications of national debt on the finances of an independent Wales.

Firstly some facts and figures – the UK National Debt currently stands at £940 Billion with interest payments on this debt amounting to £43 Billion per year. Or to put it another way, every UK citizen owes almost £16,000 each, and has to pay around £720 per year on interest. If you remove the economically inactive, then the average taxpayer is having to pay around £1500 per year on interest payments alone.

Looking at this from a Welsh context an independent Wales would initially assume responsibility for 5% of the UK National Debt, or around £47 billion but we would also ‘inherit’ a 5% share of UK National Assets.

While Wales would undoubtedly want its share of Gold & Forex reserves and other transferable assets, as well as physical assets located on Welsh soil, it would be impractical to share out many of the assets (for example central London property portfolio, and overseas embassies) and politically unacceptable to share others (for example Trident submarines and their nuclear deterrent). In reality, a valuation of all assets would need to be made, and where it is not possible or practical to share out the assets proportionately , then a corresponding reduction in share of the debt would need to be made.

This is not just wishful thinking, this principle was established during the breakup of the Soviet Union, Yugoslavia and Czechoslovakia; and in many cases the easiest solution was to transfer neither debts nor assets other than those physically located in the new country – the so-called zero-option.

In practice I believe that Wales would take a proportion of UK assets and liabilities but that these would be closer to a 1-2% share than a proportionate 5%.

And this means that in an independent Wales, the average taxpayer could see a reduction in interest payments of more than £1000 per year.

To put this in a personal context, this is the same as getting yourself out of a debt crisis by moving to a smaller house to reduce the mortgage, while watching your next door neighbours struggle to make finance payments on their new speedboat.

Saturday 14 January 2012

Scotland is going places. That was the over-riding mood at their conference in Inverness.

Alex Salmond has every reason to be confident and optimistic. His speech reflected the confidence and optimism that will be needed on the part Scotland's people if the referendum on independence is to be successful.

In her fraternal address from Plaid Cymru to the conference, Elin Jones AM said that we should now be thinking about the implications of all of this for Wales.

“As you, in the SNP and in Scotland, consider the real possibility of creating an independent Scotland, we are left to consider what would be left. A UK Government governing all English matters, and only some Welsh matters and even less Northern Irish matters. It is now time for a serious debate on the future constitutional relationship of the countries of the British islands. It is time to debate equality, not subservience and dependence. To us, the UK is currently a pretence of a country. After a Yes vote in your referendum, it could no longer pretend to anyone, not even itself.”

Can we in Wales emulate the enthusiasm, confidence and determination which was on show in abundance in Inverness this weekend? A glimpse of what is possible was seen in the build up to the rugby world cup semi-final. The nation was united in wanting success then. If that same drive could be dedicated to building and equalising Wales, there'd be 'nae limits' to what we could achieve.